Correlation Between Certara and Premier

Can any of the company-specific risk be diversified away by investing in both Certara and Premier at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Certara and Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Certara and Premier, you can compare the effects of market volatilities on Certara and Premier and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Certara with a short position of Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Certara and Premier.

Diversification Opportunities for Certara and Premier

-0.37

Correlation Coefficient

Certara  Premier

Very good diversification

The 3 months correlation between Certara and Premier is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Certara and Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier and Certara is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Certara are associated (or correlated) with Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier has no effect on the direction of Certara i.e., Certara and Premier go up and down completely randomly.

Pair Corralation between Certara and Premier

Given the investment horizon of 90 days Certara is expected to under-perform the Premier. In addition to that, Certara is 1.26 times more volatile than Premier. It trades about -0.01 of its total potential returns per unit of risk. Premier is currently generating about 0.09 per unit of volatility. If you would invest  2,066  in Premier on August 31, 2024 and sell it today you would earn a total of  229.00  from holding Premier or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Certara  vs.  Premier

Certara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Certara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Certara is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Premier

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Premier are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Premier may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Certara and Premier

The main advantage of trading using opposite Certara and Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Certara position performs unexpectedly, Premier can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Premier will offset losses from the drop in Premier's long position.

The idea behind Certara and Premier pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..